Westrock shops for £300m of regional assets

Posted by Property Week on 28th Feb 2014

Westrock has launched an ambitious new drive to build a portfolio of regional value-add assets, with a target portfolio size of up to £300m.

The 30-year-old property developer and investor has schemes in the UK, US and Switzerland. Its UK regional drive is codenamed Project Kubera — in reference to the lord of wealth in Hindu mythology.

This week Westrock bought its first asset for the new portfolio, the Middleton Shopping Centre in Manchester (pictured), and is now keen to amass the rest of the portfolio in the next 12 to 18 months.

The Middleton mall is Westrock’s first shopping centre purchase. It is understood to have been bought out of administration for just less than £14m, which reflects a yield of around 12%. The 300,000 sq ft shopping centre was put up for sale by administrators at Deloitte for Warner Estate’s Agora Shopping Centre.

It will be asset managed by shopping centre specialist Ellandi.

Westrock is seeking regional properties or portfolios that offer value-add opportunities across the retail, office and industrial sectors, as self-storage.

It will target lot sizes of £15m to £100m and double-digit yields. It will also consider assets with shorter leases or vacancies, and is happy to take on development risk. To secure the right assets, it is initially willing to purchase with cash — as it did with Middleton.

Westrock said it has the capability to manage the portfolio in house through Westrock Asset Management. For assets such as shopping centres, however, it will look to bring in specialist partners such as Ellandi. So far, it has been seeking sites across England, with no focus on any one specific region.

Aravinda Neuman, managing director of Westrock, told Property Week: “We think London is too expensive and the value-creation opportunities are being overpriced. There is more realistic pricing and higher margins in the regions. Because we have always invested in both the regions and London, we are comfortable in locations outside the capital.”

Richard Tanner, Ellandi finance director, added that with immediate capital expenditure and asset management the Middleton scheme can be turned around.

“This is an asset with good core fundamentals that previously traded for £42m,” he said.

GCW and London and Associated Properties advised the administrators; BCM and CBRE advised Westrock and Ellandi. Baker Proudlove and Hynes Illingworth have been appointed as joint agents to lease the mall.

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